“S&P 500 heads for record close as Nvidia soars, investors look for rate cuts,” read one mid-week mainstream media market wrap.
That’s gotta be a gut punch if you’re a bear. More records. More AI. More rate-cut speculation. More cowbell.
“New quarter, new half. This is when a wall of money comes into the equity market quickly,” Goldman’s Scott Rubner told clients on Wednesday. Scott’s a tactician. Like Nomura’s Charlie McElligott. Only not as fun to read. (Charlie’s out of the office on a trip to Singapore this week, if you were wondering.)
Wednesday’s US macro releases threaded the needle. ADP hiring was soft, but ISM services handily beat estimates. Put the two together and what do you get? Goldilocks! Or something. 10s were inside of 4.30% at one point. So, 40bps off the YTD highs. Twos are now safely below 5%.
Traders are back to pricing ~two Fed cuts for 2024. Just a week ago, hawkish rhetoric had markets wondering if the Committee might eschew easing altogether this year. Oh how quickly the narrative can shift!
It helps that the Bank of Canada went ahead with a cut, becoming the first G7 central bank to ease. The ECB will become the second on Thursday.
Tiff Macklem put a dovish spin on the BoC decision. It’s “reasonable,” he said, “to expect further cuts.” When was the last time you saw a “dovish cut”? It’s been a while.
Analysts debated whether that was the correct interpretation of the BoC’s forward guidance. Maybe, one bank mused, Wednesday’s move counted as a “‘cautious’ cut,” somewhere between dovish and hawkish. Macklem said he doesn’t “want monetary policy to be more restrictive than it needs to be to get inflation back to target.” There were caveats aplenty, but that sounded pretty dovish to me.
By Wednesday afternoon on Wall Street, it was all going right. Nvidia was better than 4% higher, passing Apple to become the second-most valuable US company. Speaking of Apple, it was on course for an eighth straight daily gain. And on and on.
Goldman’s Rubner noted that if you’re a fan of month-based investing, July’s a good bet. As the figure below shows, the S&P hasn’t had a losing July since 2014. The Nasdaq 100 has rallied for 16 consecutive Julys.
What could possibly go wrong with that strategy, right? “Why’d you buy?” “Because it was July.”
You might be asking yourself: Is anyone still bearish? The answer is… well, the answer’s Albert Edwards.
“Even if armageddon looms, I guarantee the investment air will be filled with the sound of the bulls singing their soft-landing siren songs,” Edwards wrote Wednesday, in a note called “Recession: Is it finally here?” If you’re Albert, that’s always a rhetorical question.
I’ll be honest… I could have used a little more cowbell.
Sorry, had to get that out of my system.
My mind is blown that NVDA just took the 2 spot, and I have no problem fading that. I mean, I’m not selling it short. I’m not a fucking moron. But never bet on hardware. Commodities have no moat. Just ask IBM.
I took advantage of some 52 week highs and did some selling today. It’s never wrong to take profits. I never short tho, too risky for me
The innocent, hopeful look on the bear’s face as it gazes upon the rocks while speeding ahead with full sails… guffaw! Perhaps it sees a safe landing upon which to jump and abandon ship stage right (if only for a time). Love the artwork. Laughter is sometimes hard to come by, and well received when it comes from somewhere unexpected.
Whatever happened to “The future is never clear; you pay a very high price in the stock market for a cheery consensus.” Warrren Buffet(1979).
My those SPY puts look cheap…
H-Man, been awhile posting but have to wonder what kind of rag guy you are — Amiri jeans and some hoodie from another planet. Anyway, back to business– the cycle is turning, ever so slowly but surely, and it does not bode well for equities. Interesting piece that immigration according to the CBO has kept the economy alive and will do so in the near future. Right now being long treasuries on the long end with a touch of chip exposure seems to be the game.
You should see my denim jacket collection.
I don’t know why anyone in here remains interested in your fashion sense after you freely admitted to wearing a white denim jacket. I mean, the Patrick Bateman schtick has always been on-the-nose, but white denim? There are lines, dude.
I, too, recall that reference to wearing a white jacket. I definitely wasn’t picturing anything from the GAP. 🙂
H: I see Jensen has moved on to a Tom Ford Tejus lizard-embossed version of his signature black motorcycle jacket. 🙂
The bond market needs to stabilize or the roller coaster will just continue. This has been a good week in that regard. I hope the U.S. can follow Canada and the EU in short order, but July seems iffy, and September is so far away.